Tribes have long worked to foster economic development. For example, archeological and historical evidence shows that extensive trading took place among tribes before the arrival of Europeans to the Americas, and there was extensive trading between tribes and early European settlers. The loss of land and resources and the forced removal to reservations dealt crushing blows to most tribal economies and fostered a dependence on federal welfare programs. (18)
In more recent times, tribes have developed overall economic development plans with the support of federal agencies such as the Economic Development Administration and Minority Business Development Administration (in the U.S. Department of Commerce), and the Small Business Administration.
Despite many obstacles, tribal economic development efforts often have been innovative and bold. Many of these efforts have produced sorely needed revenues for the tribes. Nevertheless, the current pace of job creation compared to the number of jobs needed suggests that, for many years to come, a lack of jobs will continue to prevent many TANF recipients and others from securing unsubsidized employment.
The most successful examples of economic development in Indian country include gaming and tourism. All of the WtW grantees in the study (except for the two consortia) had considered developing gaming operations. (19) One of the tribes has rejected the development of gaming, and the other seven tribes have implemented gaming operations. Of the seven tribes that implemented gaming, four have achieved modest success, one has been extremely successful, and two appeared on the verge of achieving high levels of success. For the Cherokee, the tribal economy has been and continues to be transformed by the success of its gaming operations (Box II.2). Even for the Cherokee, however, unemployment on the reservation still exceeded 12 percent in1998.
Some tribes have successful, even economy-transforming, gaming operations, but many tribal gaming operations have been unsuccessful or have experienced only modest success. Location seems to be critical to the success of tribal gaming operations. Factors related to location are (1) the proximity of urban population centers to the casino, (2) the presence of other tourist attractions near the casino, and (3) the availability of alternate gaming venues. The success of gaming tends to be limited for tribes distant from urban centers and for tribes near alternate gaming facilities. Conversely, gaming tends to be successful for tribes with casinos located near nongaming tourist attractions. For example, the highly successful Cherokee casino is within a day's drive of population centers such as Knoxville, Tennessee; Asheville, North Carolina; and Atlanta, Georgia. It is located near the country's most-visited national park (Great Smoky Mountains National Park), and the park brings many potential customers to the area. Finally, there are few other gaming operations near the casino that compete with it for customers.
Until the 1990s, the Cherokee faced circumstances that blocked movement from welfare to work for many tribal members. There were few paying jobs on or near the reservation, many unemployed Cherokee had less than a high school degree or equivalent, and job creation and economic development were sluggish (as they were for the rural North Carolina counties surrounding the reservation). For many years, the tribe had operated a small bingo operation; after court decisions in the 1970s and 1980s limited states' regulation of gaming on Indian reservations, the tribe expanded its bingo operation and began to market it to the public. The enhanced bingo operation was so successful that the tribe built a 60,000-square-foot casino, which has yielded millions of dollars of profits each year for the tribe.
The tribe and the casino have become the largest employers in the five counties contiguous with the reservation. The casino has transformed the Cherokee economy, drawing thousands of customers each day, and stimulating the creation of a variety of service businesses such as hotels and motels, restaurants, and grocery stores. These businesses, in turn, have triggered the birth of other businesses that supply needed goods and services. By 1998, the casino and related businesses helped to drive the unemployment rate among the Cherokee from more than 50 percent to about 12 percent (although this is a figure still more than twice that of the national rate in 1998).
At Cherokee, gaming has been associated with unprecedented growth and job creation in the reservation economy. Although many casino jobs are entry- and mid-level, the casino has stimulated many other jobs in the service and retail sectors. The effects of a successful casino can reverberate throughout the reservation. At Cherokee, there are about 50 motels in the area, 15 of which have opened in the past five years. In the past year, a number of restaurants and a supermarket have opened. These new establishments are adding a substantial number of jobs. The casino has generated unprecedented profits, and the tribe uses these profits to improve programs and infrastructure, to finance economic development initiatives, and to provide modest per-capita payments to tribal members.
Other tribal casinos have been successful also. While theirs are not as successful as the Cherokee casino, White Earth, Klamath, and Nez Perce have rapidly growing casinos and associated developments. The casino operated by the Kickapoo Tribe of Kansas provides a wide range of jobs, including those for dealers, food service workers, and tellers. Casino jobs at Kickapoo have good salaries and benefits (100 percent of health insurance cost is paid for employees, as well as 80 percent for dental, eye, and prescription coverage). The Kickapoo casino has been a source of jobs for nontribal community members as well--respondents at Kickapoo indicated that some local farmers who have gone bankrupt have taken casino jobs.
Other promising approaches to economic development and job creation in the study sites include:
- Applications of Advances in Science, Technology, Engineering, and Construction to Tribal Enterprises. Several tribes in the study had applied or were applying advances to the operation of a wide range of business activities. For example, both Red Lake and Cherokee were applying modern approaches to aquaculture and preservation of fisheries; Nez Perce employ advanced breeding and veterinary approaches to maintaining the Appaloosa breed of horses. Red Lake and Three Affiliated Tribes are applying sophisticated manufacturing to the construction of modular homes and aircraft components, respectively.
- Development of Key Infrastructure. The federal government and private sector enterprises are helping tribes develop infrastructure needed to support economic development in the vast areas some tribes inhabit (Box II.3). Projects include satellite-based and cellular telecommunications, sanitation facilities, and transportation infrastructure. For example, roads and landing strips funded by the federal government have dramatically improved access by airplane to Alaska Native villages. Air travel is now the principal mode of transportation between the villages and urban centers and is used for shipping supplies, travel, and tourism. The Navajo Nation, Three Affiliated Tribes, and White Earth operate community colleges that use satellite and Internet-based systems for distance learning.
The Navajo Nation includes portions of Arizona, New Mexico, and Utah, as well as three quasi-autonomous satellite reservations in New Mexico. The Navajo Nation is vast (roughly the size of West Virginia). It includes arid deserts, alpine forests, high plateaus, mesas, and mountains as high as 10,500 feet. Most of the 234,000 Navajos on the reservation live in traditional hogans, without indoor plumbing, electricity, or telephone service.
While Interstate 40 passes through the southeast corner of the Nation and U.S. highways 160 and 191 pass through the reservation, many of the roads between Navajo communities are unpaved. There is no public transportation on the reservation. Consequently, lack of transportation is a critical barrier to employment on the reservation.
The reservation has significant amounts of natural resources, including timber, coal, uranium, and land suitable for agribusiness. While all of these resources are being developed, there are far fewer jobs available than people looking for work.
These initiatives have improved economic prospects and created jobs on some reservations. However, the slow pace of economic development in Indian country stymies the goal of welfare reform--moving people from welfare to work. As described later in this report, dedicated efforts by TANF, WtW, NEW and other programs operated by states and by tribes have made some progress in identifying and removing barriers to the employment of American Indians and Alaska Natives residing on or near reservations. To a great extent, however, these efforts have been unable to place large numbers of program participants in unsubsidized employment. The result is that many tribal welfare recipients are now ready and willing to work, but few jobs are available.
1. See, for example, Cohen (1982).
2. Indian Reorganization Act of 1934 (25 USC 461-479); Public Law 83-280 of 1953 (18 USC 1321-1326); Indian Civil Rights Act of 1968 (25USC 1301-1341).
3. American Indian Policy Review Commission (1997).
4. American Indian Policy Review Commission (1997).
5. Cherokee Nation v. Georgia (1831).
6. In this context, "tribal self-determination" is broader than the Indian Self-Determination and Education Assistance Act of 1975 (PL 93-638) and refers to broad tribal and federal policies that promote tribal control and self-governance.
7. While there were treaties and other legal relationships between Indian tribes and European nations and, subsequently, individual American colonies, relations with the United States are expressed in the Constitution under the Indian Commerce clause, article I, section 8, clause 3: "The Congress shall have Power to regulate Commerce with foreign nations, and among the several States, and with Indian Tribes." The Indian Trade and Intercourse Act of 1790 brought nearly all interaction between Indians and non-Indians under federal control.
8. The United States negotiated formal treaties with individual tribes until the Treaties Statute of 1871 ended that practice.
9. In Lone Wolf v. Hitchcock, the court held that rights established by treaty or other documents can be abrogated by Congress pursuant to its plenary powers.
10. Bureau of Indian Affairs (1997).
11. U.S. Bureau of the Census (1990).
12. U.S. Bureau of the Census (1990).
13. Indian Health Service (1998).
14. U.S. Bureau of the Census (1990).
15. National American Indian Housing Council (1998).
16. Indian Health Service (1999).
17. Indian Health Service (1999).
18. American Indian Policy Review Commission (1997).
19. Two of the WtW grantees in the study--TCC and CIMC--were tribal consortia. Neither TCC nor any of its members had gaming operations. Several members of CIMC had implemented gaming operations, but CIMC as a consortium organization had not.